TRIPS-PLUS AGENDA

CI-Avaniendra Chakravartty

An unrelenting campaign: the record of pharmaceutical companies

• The drug industry in India spends 20% of its annual sale amounting to Rs.4,000 crores in advertising. This works out to about Rs.50,000 per doctor per annum and each doctor prescribes drugs worth Rs.250,000 per annum.

The US TRIPS-plus agendaPharmaceutical companies did not interpret the

Doha Declaration as a signal to stop pursuing stronger intellectual property rules in developing countries; instead, they saw it as a signal to change tactics.

The USA, with the influence of pharmaceutical companies, is uniquely guilty of imposing higher standards of intellectual property protection (TRIPS-plus rules). These rules violate US commitments under the Doha Declaration and prevent developing countries from using safeguards to protect public health.

The US TRIPS-plus agenda• USA has vigorously represented the commercial

interests of pharmaceutical companies in trade negotiations with developing countries example-

• The office of the United States Trade Representative (USTR) announced an internal reorganization to reflect ‘our efforts to better support vital US innovations, including those in the pharmaceutical industry’.

USA seeks worldwide harmonization of intellectual property rules on a level at or above US law, which is stricter than TRIPS. (go to foot note)

Does the USA Government criticize the actions for giving primacy to trade over health-

Recently, the Bush administration has sought to stop World Health Organization staff engaging in or publishing research or statements that critique the impact of US trade policy on public health. (press release from Senator Edward Kenney and Congressman Henry Waxman and their accompanying letter to the US Secretary of Health and Human Services, Michael Leavitt, 13 October 2006, http://www.democrats.reform.house.gov/story.asp?ID=1126. )

Bilateral and regional free trade agreements (FTAs)

• Every FTA signed or currently under negotiation has disregarded the fundamental obligations of the Declaration by maintaining or imposing higher levels of intellectual property protection that further restrict generic competition. (foot note), though many US trading partners are developing countries with millions of poor people unable to afford expensive medicines.

The FTAs contain the following TRIPS-plus rules: • Expanding the scope of pharmaceutical patents,

including to new indications (new therapeutic uses of existing medicines) and formulations .

• Enhancing protections for clinical trial data by providing at least five years of marketing exclusivity for the data (also known as data exclusivity

• Limiting the grounds for issuing compulsory licenses to emergencies, government non-commercial use, and competition cases;

TRIPS-plus rules• Barring parallel trade of patented medicines

sold more cheaply elsewhere

• Extending patent monopolies for administrative delays by patent offices and drug regulatory authorities;

• Linking drug registration to patent status, thereby preventing registration and sale of generics during the patent term;

TRIPS-plus rules• Enforcing patent violations and granting

pharmaceutical companies investor-based rights to sue, including for improvidently granted compulsory licences;

• Prohibiting pre-grant patent oppositions, and making it more difficult to revoke invalid patents.

TRIPS-Plus and Free Trade

Ban parallel importation

Limit use of compulsory licensing

Expand patent limits Data exclusivity

Australia, Peru, NAFTA, DR-CAFTA

Undermines WTO agreements

Bipartisan Trade Promotion Authority Act of 2002 promotes US-style IPR

TRIPS-Plus Multi/Bilateral Free Trade Deals

Public health consequences of TRIPS-plus FTAs

• The FTAs signed between the USA and developing countries will have severe consequences on the health and welfare of people in those countries. Studies confirm that if FTAs with developing countries are enforced, the price of new medicines will increase and remain higher over time, with potentially devastating effects upon poor people.

Long-term public health burden of FTAs on access to affordable medicines in Colombia, Peru, and Thailand

Relevant FTA Source Public Health Impacts

US–Colombia FTA Pan American Health Organization!

(2005) 1

By 2020, the Colombian health system would pay an additional $940m per year to cover the cost of medicines, and approximately 6 million users would have no access to medicines through the health system.

US–Peru FTA Peruvian Ministry of Health3 (2005)

Prices for medicines would rise 9.6 per cent on average in the first year, 100 per cent in 10 years and 162 per cent in 18 years. In 10 years, Peru would incur additional medicine expenses of $199.3m – of which $110m would have to be met by Peruvian households.

US–Thailand FTA World Bank3(2006 Compulsory licensing, which is threatened by an FTA, could otherwise reduce the cost of 2nd line ARVs – which most patients will eventually need – by 90 per cent. This would represent a saving of $3.2bn34 for the Thai national health budget over 20 years

Different forms of US pressure-In addition to FTAs, the USA exerts other forms

of pressure on developing countries to implement higher levels of intellectual property protection. This includes monitoring other countries’ intellectual property rules in relation to US standards (Special 301 reports) and introducing TRIPS-plus rules during the WTO accession process.

A- Special 301 reports B- WTO Accessions

Special 301 reports• The USA continues to exert unilateral pressure

upon poor countries through the Special 301 process, an annual report that evaluates intellectual property protection in other countries. If a country does not comply with US standards, it can be placed on the ‘Priority Watch List’, meaning the country could face unilateral trade sanctions. Armed with FTAs that legally bind countries to TRIPS-plus provisions, the USA and pharmaceutical companies can now use the Special 301 process as an additional tool to enforce strict TRIPS-plus rules.

WTO Accessions• Countries acceding to the WTO must abide by

WTO rules. In addition, existing WTO members may ask for additional concessions, often exceeding their own WTO commitments. Without the support of countries like the USA, entry is impossible since it requires consensus among all WTO members. The process of accession includes confidential bilateral negotiations with rich countries, during which aspiring members are pressured into accepting WTO-plus commitments in many areas, including intellectual property

• Since passage of the Doha Declaration, the USA has used the accession process to force poor acceding countries to forego their rights under the TRIPS Agreement. In particular, the USA used the process to pressure Cambodia and Nepal to forego the transition period allowing least-developed countries to wait until 2016 to provide intellectual property protection for medicines.

• Medicine prices in Jordan have increased 20 per cent since 2001. Higher medicine prices are now threatening the financial sustainability of government public health programmes(1).

• In particular, data exclusivity has delayed generic competition for 79 per cent of medicines newly launched by 21 multinational pharmaceutical companies between 2002 and mid-2006, that otherwise would have been available in an inexpensive, generic form.

• Numerous studies forecast that TRIPS-plus rules will result in increases in medicine prices over time, putting a strain on health budgets and leaving poor people with catastrophic out-of pocket expenses for medicines.(2)

(1)According to the 2005 National Health Strategy, the “rise in the pharmaceuticals bill” represents one of the main “challenges that face….continuation of health programmes… and sustainability of funding for those programmes.”

(2)-(go to notes page)

How TRIPS-plus intellectual property rules in the US-Jordan FTA affect access to

medicines

Relative prices between medicines with no generic competition in Jordan (due to enforcement of data exclusivity) and the price

of the lowest-priced generic equivalent in Egypt

Artificial Price Inflation: The R&D Excuse

Why are Drug Costs so High When drug manufacture costs are actually low:

Celebrex 100 mg Consumer price (100 tablets): $130.27 Cost of general active ingredients: $0.60 Percent markup: 21,712%

Lipitor 20 mg Consumer Price (100 tablets): $272.37 Cost of general active ingredients: $5.80 Percent markup: 4,696%

Pharma Market Share by Region

Indian subcontinent1.4%1.4%

Asia2.7%2.7%

All of Africa, Asia & Latin America = 13.1%13.1%

Sub-Saharan Africa 1.2%.2%

Professor Brook Baker, “Drug Company Economics and the R&D Excuse”

Europe and North America = 86.9%86.9%

• Why don’t pharmaceutical companies sell to more patients at a lower cost? Doesn’t economics teach us that maximizing market share lead to greater profits?

• Let’s look at the Price vs. Quantity Demand Curve

Drug Price & Profit Maximization

Highly convex demand curve where high income inequity exists. Profits can be maximized by high prices.

Professor Brook Baker, “Drug Company Economics and the R&D Excuse”

Generic Competition & Price [1]

• Since 2001, generic competition has reduced the price of first line triple-therapy 99%!

Professor Brook Baker, “Drug Company Economics and the R&D Excuse”

Generic Competition & Price [2]

Cost of Statins: Simva prices drop from $1155/year to $40/year!

Past and Present Cost of Statins (US $)Year 2002Statin Route Dosage Cost/yearAtorvastatin (Lipitor) Oral 20mg once 1,155.60Fluvastatin (Lescol) Oral 40mg once 583.20Fluvastatin XR (Lescol XL) Oral 80mg once 730.80Lovastatin (generic) Oral 40mg once 664.00Lovastatin XR (Altocor) Oral 40mg hs 1,076.40Pravastatin (Pravachol) Oral 40mg once 1,468.40Simvastatin (Zocor) Oral 20mg once 1,155.60Table 5A: Yearly Wholeslae Cost Feb 2002 - 2003 (Scott-Levin's Source Prescription Audit) in USwww.drugstore.com

Fall 2006Statin Route Dosage Cost/package Cost/unit Cost/yearAtorvastatin Oral 20mg 22.08 (30) 1.1041 264.96Fluvastatin Oral 20mg 20.10 (28) 0.7146 240.12Lovastatin (generic) Oral 20mg 1.23 (100) 0.0123 4.49

2.75 (30) 0.0916 33.00Pravastatin (generic) Oral 20-40mg 10.00 (90) 0.11 40.15Rousuvastatin n/aSimvastatin (Zocor) Oral 20mg 24.84 (30) 0.828 298.08 (generic) Oral 20-40mg 10.00 (90) 0.11 40.15Table 5B*: Management Sciences for Health (MSH) International Drug Price Indicator GuideReference: http://erc.msh.org/mainpage.cfm?file=1.0.htm&module=DMP&language=english

TRIPS and AGRICULTURE

• Forcing developing countries to extend IPR to plant verities and seedsity with impact on agriculture.

• Six multinationals control around 70% of the patents held on staple food crops.

• Food security under threat- farmers suicide

Increased costs for small farmers

• In Andhra Pradesh farmers paid upto Rs 1600 for a 450gm of Bt cotton( of which the royalty component was 1200) as against 450-500 for normal varities.

• Farmers using Bt cotton seeds experienced an average net loss of 1295 rupees per acre while those using traditional methods earned an average profit of 5368 Rupees per acre (Action Aid)

TOWARDS A SUSTAINABLE SOLUTIONSOCIAL AND ECONOMIC JUSTICE

“Some observers attribute the rapid spread of HIV in Africa at least in part to Structural Adjustments Programs, which increased migration and urbanization, drove more people into poverty, forced women into prostitution, while at the same time depriving health ministries of enough money to provide health care and prevention”

- The Lancet, Vol 344, Nov. 19, 1994

Market Access (protectionism, competitiveness) Technical

Barriers to Trade

Especially, Labeling, IPR

Southern Apprehensions – Southern Apprehensions – 1:1:Fears of Environmental Fears of Environmental

ProtectionismProtectionism

Which isses are trade related

Health issues

Environmental Goods & Services

Agricultural issues Environmental Measures

Southern Apprehensions – Southern Apprehensions – 2:2:Nervousness about Doha’s Nervousness about Doha’s

Unclear MandateUnclear Mandate

Getting from Apprehension to Opportunity

Challenges for usMoving to a Proactive Agenda is

going to be neither easy,

nor automatic.

The responsibility as well as

the incentive to do so lies

squarely with us.

Defining the problem:“The people with HIV are where the drugs are not.”

Compare and contrast

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• Rwanda gives $1 million to Global Fund

• US gives $200 million to Global Fund

• Making Rwanda more ten times more generous, proportionately

Identifying Identifying Our Own Our Own PrioritiesPriorities

#1

Creating Creating Options & Options &

AlternativesAlternatives

#2

Envisioning Envisioning a New a New

AgendaAgenda

#3

Where do we go from here?Taking the Next Step:

Imagining a Southern Agenda

What can we do?

“These are all human institutions, they are subject to human will, and they can be eliminated like other tyrannical institutions have been.”

- Noam Chomsky